Economy
In 2024, under President Javier Milei, Argentina saw major economic changes, focusing on austerity, deregulation, and reducing government spending. The most pressing issue for Milei was hyperinflation. Inflation dropped from 300% in May 2024 to 55.9% in March 2025, the lowest level in over three years, with monthly inflation hitting a five-year low of 2.2% in January. Milei cut government positions by approximately 52,000, a reduction of between 9.6% and 15.7%; reduced salaries of high-ranking officials; and shut down the tax agency (AFIP), replacing it with a smaller one, saving billions. While poverty rose to 57% early in 2024, it declined to 38.1% by Q3, with homelessness also decreasing.
The economy shrank in early 2024, but grew 3.9% in Q3, helped by an 80.2% rebound in agriculture. The Argentine peso strengthened by 44.2% against the U.S. dollar, boosting average wages in dollar terms to $990. Wages, along with purchasing power in Argentina began falling in October 2023, before Milei was elected and inaugurated as president. By the start of his presidency, real wages fell by more than 20%. They have mostly rebounded back to their November 2023 levels, ending the first year of his presidency as an economic success.
Argentina paid off $4.3 billion in debt, and investor confidence soared, pushing bond prices higher. According to Gallup, the confidence in the economy by everyday people soared in end of 2024, reaching heights not seen since 2015. The country signed a free trade deal with the EU, and credit ratings improved. Forecasts predict economic growth of 3.5%–5.5% in 2025 as inflation stabilizes and investments increase. Argentina's market risk assessment fell below 500 points for the first time since 2018.
2025 was a turbulent year for Milei. Inflation had become 1.5% a month, and poverty had markedly fallen to 31.6%, the lowest it had been since 2018. In the first half of 2025, reports indicate that the middle class grew by 7.7 million, rebounding back to pre-pandemic levels of 39% Moody's have increased Argentina's rating from 'Ca' to 'Caa3 as Argentina's economy demonstrates solid recovery progress. While average wages increased 20.7% in the first half of 2025, outpacing the country's 15.1% inflation rate, and GDP was expected to grow 5.5%, final GDP for the year ended up at 4.37%, and while wages rose 28.8%, the inflation rate reached 31.8%, resulting in a 2.5% decline in real purchasing power. Milei contended that a fiscal surplus remained non-negotiable, with a target of 1.6% for 2025, and a surplus of 1.4% was achieved.
Karina's scandal and the subsequent loss of the legislative elections in Buenos Aires resulted in backlash from the markets, temporarily jeopardizing the macro-economic situation that Milei had dedicated his presidency to date, as the market feared that Milei losing the midterm elections would result in the stifling of his agenda. The meltdown caused Argentina to blow through 1 billion dollars of reserves to uphold the peso. U.S. Secretary of the Treasury Scott Bessent's announcement that all options are available between the American treasury and Argentine government halted the gradual implosion. The economic reforms and policies have had a significant impact on the average Argentine, as some common expenses such as private school tuition and health insurance plans have risen above CPI.
Despite soaring disapproval ratings, Milei achieved victory in the legislative elections of 2025, attaining a larger than expected share of votes. The victory galvanized the economy, leading towards bonds increasing by 23% in a day, the Argentine stock market growing by 70% compared to last month and the peso briefly appreciating in value. The country risk index dropped by 40% after the elections.
President Milei stopped an economic crises from unraveling even further in 2024, but recovery has proven difficult and in some cases uneven. “Without investment, amid business closures and no formal job creation, the Argentine economy is moving neither backward nor forward,” said Lorenzo Sigaut Gravina, an economist at consulting firm Equilibra, which forecasts just two percent growth this year.
Inflation was the foremost largest issue dominating contemporary Argentine politics, as it spiraled out of control during and for some time after the elections of 2023. The issue had been a consistent phenomenon throughout the history of Argentina, a country whose economy had been mismanaged for decades. Milei, convinced that the Peronist establishment largely caused the economic crisis, made it his main objective during the first and second year of his presidency to stop the situation from getting worse through anti-inflationary economic policies, and to diminish the influence of Peronism. Annual inflation stood at 254.2% in the first month of Milei's term, and reached a peak of 300% in May 2024. Monthly inflation slowed in 2024 as Milei continued to push austerity and deregulation measures to revive the country's struggling economy. Annual inflation rate came in at 39.4% in July 2025. On the same month, monthly inflation reached a 5-year low of 1.5%.
Wages, along with purchasing power in Argentina began falling in October 2023, before Milei was elected and inaugurated as president. By the start of his presidency, real wages fell by more than 20%. In 2024, wages rose by 145.5%, outpacing the 117.8% inflation rate for the first time since 2021, according to INDEC. According to Nowcast, the year-over-year increase in total family income (ITF) reached 185.7%. In October 2024, CEPA reported that private sector wages had nearly returned to November 2023 levels. However, public sector incomes remained 14.8% lower, and informal workers were still down 21.3%. Continuing this trend, wages have risen by 20.7% in the first half of 2025, above an inflation rate of 15.1%, however it again fell below inflation in the second half of 2025 for some sectors.
The defeat in the local elections in Buenos Aires scared the market, with investors afraid that Milei would not be able to maintain his free market agenda in his presidential term. Victory in the legislative elections caused the Peso to rally temporarily before stabilizing again.
During his campaign and throughout his presidency, Javier Milei has said several times that the reforms he plans to enact are "painful", but "necessary", contending that it is "the only way". "There is no alternative to a shock adjustment", Milei said during his inauguration. "There is no money." In June 2024, Milei was able to pass his tax and 'omnibus' bill. The bill, watered down significantly from its original form, aimed at deregulating and reforming several sectors and state owned enterprises in Argentina, also included reforms concerning labour, commerce and real estate and various social programmes such as healthcare.
President Javier Milei achieved a budget surplus within the first few months in office by gutting chunks of the government structure and downsizing it drastically and reducing the salaries of high ranking authorities, leading to a reduction of government spending by 30%. This has resulted in a financial surplus for 6 consecutive months for the first time since 2008. The reforms have led to 9.6% of all federal employees (approximately 52,000) being laid off, saving the government nearly 2.1 billion in taxes.
In July 2024, the Argentine National Congress approved Milei's Ley de Bases, a wide-ranging reform law that marked a major legislative achievement for a government with limited parliamentary representation; a central element of the law is the Incentive Regime for Large Investments (Régimen de Incentivos para Grandes Inversiones, RIGI), which seeks to attract large-scale domestic and foreign investment by guaranteeing stable tax, foreign exchange, trade, and capital repatriation rules for up to 30 years. The regime applies to projects exceeding US$200 million in sectors such as energy, oil and gas, mining, infrastructure, forestry, tourism, technology, and steel, with enhanced benefits for investments above US$1 billion, including lower corporate and dividend taxes, phased elimination of export taxes, and exemptions from capital and trade controls. RIGI is predicted to reduce investor exposure to Argentina's historically volatile economic conditions and support a shift away from a state-centered, inflation-prone economic model toward greater financial stability and private investment.
Milei's repealing of rent controls in December 2023 has caused rental unit supply to increase by 190%. This resulted in a 40% decline in real price of rental properties when adjusted for inflation. Inflation-adjusted rents have remained relatively stable since. From January to May 2025 rents have increased by 1.6% after adjusting for inflation.
"He has done more good than many people expected", said Alejandro Werner, a former official with the International Monetary Fund. "Maybe I would choose to do it a different way. But, sometimes, to change things, you need somebody that’s a little bit of a fanatic to really move the needle. And he has done it." Though the macroeconomic side had become stabilized, the societal consequences were palpable. Patience towards president Milei's reforms runs thin as his economic reforms cuts into salaries and pushes up the cost of living.
Data from the IARAF institute shows President Milei decreased government spending by approximately 8 billion dollars in 2 years.
Milei's government initiated a program titled "Fiscal Innocence" in a bid to integrate an estimated $170 billion dollars that reside outside the formal financial system and drive growth. That program would allow Argentinians to deposit money into the banks without needing to declare a source of income or incur additional tax obligations. This program has met with little success however to shift the trends resulting from the 2001 forced conversion to the peso which saw most Argentines lose nearly 75% of their savings. Longstanding distrust of the government and financial systems following this and other incidents has led to wide spread retention of hard currency, termed "mattress dollars." Argentines continue to buy around $2 billion of foreign currency every month as a hedge against inflation.
During the first six months of his presidency, poverty rates increased by over 11 percentage points, from 41.7% to 52.9%, briefly peaking at 57.4% at the end of January 2024. In response, his government pointed out that poverty rates were already rising under previous administrations. According to INDEC, poverty rates fell to 38.1% during the third quarter of 2024. Conversely, the Catholic University of Argentina (UCA) estimated poverty for the same quarter as 41.6%, adjusted for the reduced consumption rates as well as rising healthcare costs.
The Ministry of Human Capital estimated a drop in poverty during the first quarter of 2025 from 38.1% to 31.7%. An economist working for CEDLAS (Center for distributive, Labour and Social Studies), estimates that between October 2024 and March 2025, the poverty rate dropped to 34.4%. A report published in July 2025 largely confirmed these predictions, finding that Argentina's urban poverty rate dropped to 31.6% in the first half of 2025, its lowest level since 2018. Extreme poverty also decreased from 18.2% to 7.4% annually.
INDEC reported the official poverty rate to be 31.6% of the general population in the first half of 2025, with household poverty coming in at 24.1%. The UCA disputes the magnitude of the reduction, arguing that INDEC uses an inadequate methodology. They find that poverty has decreased to 36.3%, compared to their previous estimate of 45.6% in the same period a year ago, lowest since 2018.
Income inequality increased slightly from 0.417 to 0.436 in 2024, but decreased to 0.427 by the end of 2025.
In June, during a meeting in Berlin, Milei and German chancellor Olaf Scholz expressed support for a free trade agreement between the EU and Mercosur. An agreement on the free trade deal was announced on 6 December 2024.
Milei's actions have led to Argentina regaining a favourable relation with the IMF after having been in a precarious position for almost 2 years, securing a 20 billion dollar loan. Since July 2022, the country has consistently kept a risk assessment of over 2000 points, well above the continental average of 250 points, marking significant volatility and lack of trust in the market. Since Milei's victory, the risk assessment trended downward, falling below 500 points for the first time since 2018. The loan is set to be used to disintegrate the remaining capital controls on the peso, as well as aiding the government in building up reserves, which had been exhausted prior to his presidency. J. P. Morgan has commented that "The policy advancements represent a significant step forward, enabling the country to unlock a potential that has been stifled for decades due to poor policy-making." Argentina is the IMF's largest debtor country. The possibility of a peronist victory led towards the market reacting with fear, resulting in the peso depreciating and the central bank having to spend a billion dollars to maintain the currency in its bandwidth. The market risk index surged due to this reaction.
By June 2025 foreign inflows of cash grew constrained in Argentina falling 54% in 2024, and as of April 2025 stands at a $3 billion deficit.
In September 2025, the possibility of Milei losing the midterm elections sent shockwaves throughout the Argentine market, leading towards intervention by the central bank. U.S. Secretary Scott Bessent's announcement that a 20 billion dollar swap line for Argentina was ready halted the market meltdown, leaving it in a fragile state. Milei's attempt on stabilizing the currency has led towards an increase in purchasing power, which Argentines have exploited by travelling abroad. This has cost the government billions. Mr. Milei is testing the patience of ordinary Argentines, as his economic reforms cuts into salaries and pushes up the cost of living.
Shortly after Milei's strong performance and victory in the 2025 legislative elections, the Argentinian bond market surged, with dollar notes due in 2035 having increased by 23% in one day. Argentina's risk index plummeted by 40% (1081 to 652) in the same day.
Seeing the relative stability of Argentina's economy post elections, US banks revisited the deal for a 20 billion dollar swap, downsizing it to 5 billion dollars.
In the first and second quarter of 2024, Argentina's GDP contracted by 2.1% and 1.8%. However, in the last quarter, it expanded 3.9%, despite the significant austerity implemented by the President. Conversely, agriculture rebounded dramatically from a severe drought, achieving an impressive growth rate of 80.2% as conditions improved. The economy of Argentina is projected by the BBVA to grow by 5.5% in 2025, and by Goldman Sachs by 3.5% and 4.5% by the Argentine central bank, as inflation stabilizes and investment starts pouring in, due to Milei's liberalization of the economy. The financial improvements seen in the 3rd quarter of 2024 are complemented by society's renewed confidence in the government, creating a positive outlook for 2025. Economic activity during January 2025 returned to levels not seen since July 2022, trended to increase. The volume of real loans towards the private sector is at an all-time high in both dollar and peso denominations. GDP has proven difficult to increase under austerity, with economists revisioning their 2025 forecast for growth to 5% as the economy shrank by 0.1% in May of the same year.
Moody's have increased Argentina's rating from 'Ca' to 'Caa3' due to the reforms initiated by President Milei.
According to CNN, Argentina's stock index MERVAL soared by 22% one day after Milei's victory in the legislative elections of 2025, indicating significant trust in the Argentine government's ability to continue its liberalizing reforms.
